2023 (7) TMI 49 - AT - Central Excise

Compounded levy scheme - wrongful/ fraudulent clearing the SS circles showing them as being produced and cleared - benefit of N/N. 17/2007-C.E., dated 01.03.2007 - It is the case of the Revenue that said notification exempts only waste and scrap arising out of manufacture of cold rolled stainless steel Patties or Pattas whereas the stainless steel scrap was generated during the manufacture of stainless steel circles and so assessee was liable for payment of central excise duty. HELD THAT - It may be pertinent to indicate that exemption to job workers from payment of duty is conditional under Notification No. 214/86- CE dated 25.03.1986 and based on filing of the undertaking by the Principal manufacturer. This cannot be held to be a mere procedural requirement - The Notification clearly states that said notification can be rendered applicable only in respect of goods for which the supplier has furnished an undertaking to the department/ jurisdictional authorities of the job workers. In the case of KARTAR ROLLING MILLS VERSUS COMMISSIONER OF C. EX., NEW DELHI 2006 (3) TMI 63 - SUPREME COURT , the benefit of exemption from duty to the job worker was denied essentially as no undertaking was filed by the principal. It is common knowledge that the responsibility in the central excise statute is on the manufacturer for payment of duty on the manufacture of finished goods which could either be a principal manufacturer or the job worker and in the event of finished goods produced by the job worker in the normal course the said job worker would be deemed to be the manufacturer. Also for entitlement of the availment of exemption notification, it is imperative that notification conditions are strictly complied with. The requirement of filing the declaration undertaking for availment of said exemption notification cannot be considered as mere procedural. In the event of non submission of such undertaking, ipso facto the said job workers of the respondent assessee automatically are the manufacturer of SS circles/ scrap so cleared by them and sent to the respondent assessee though, later cleared by them under the cover of their own invoices. Other appeals filed by the Director and the Manager of the company to assail the imposition of penalty on the two - HELD THAT - It may be pointed out that in view of the aforesaid discussions question of imposition of penalty in the matter does not survive. Also Shri R A Khemani, Director has since expired, death certificate in respect of which has also been furnished by the learned advocate for the respondent, and therefore, impugned appeal shall abate in terms of Rule 22 of the Customs Excise and Service Tax Appellate Tribunal Procedure Rules, 1982. The order of the learned Commissioner is not riddled with any infirmity and therefore, the appeals filed by the Revenue deserve to be dismissed - the appeals filed by the Revenue stand dismissed.

Summary

Issues Involved:
1. Liability of Central Excise Duty on Stainless Steel Circles and Scrap.
2. Applicability of Notification No. 214/86-CE dated 25.03.1986.
3. Procedural Compliance and Undertaking Requirements.
4. Penalty on Directors and Managers.

Summary:

1. Liability of Central Excise Duty on Stainless Steel Circles and Scrap:
The Department alleged that the respondents cleared stainless steel circles and scrap without paying central excise duty. The respondents contended they were operating under a compounded levy scheme and had not availed of Cenvat credit. The Commissioner found that the respondents sent stainless steel pattas for job work and received back stainless steel circles and scrap, which were then cleared under their own invoices.

2. Applicability of Notification No. 214/86-CE dated 25.03.1986:
The Department claimed that the respondents were liable to pay duty as they did not file the required undertaking under Notification No. 214/86-CE. The Commissioner observed that the duty liability could only be shifted to the supplier of raw materials if an undertaking was submitted, which was not done in this case. Therefore, the job worker was liable to pay the duty.

3. Procedural Compliance and Undertaking Requirements:
The Commissioner noted that the respondents did not file any declaration for job work benefits under Notification No. 214/86-CE or Rule 16A of the Central Excise Rules, 2002. The Department alleged suppression and mis-declaration, invoking an extended period of limitation. However, the Commissioner concluded that the job worker was the manufacturer and liable to pay duty, as the respondents did not file the necessary undertaking.

4. Penalty on Directors and Managers:
The appeals against the Director and Manager for penalty imposition were dismissed. The Director had since expired, and the appeal against him abated as per Rule 22 of the Customs Excise and Service Tax Appellate Tribunal Procedure Rules, 1982.

Conclusion:
The Tribunal upheld the Commissioner's order, finding no merit in the Department's contentions. The appeals filed by the Revenue were dismissed, and the Order-in-Original was upheld.